PRECIOUS METALS: Gold Up $5 an Ounce, Dollar Plunges

By IBT Staff Reporter On 06/02/08 AT 3:54 PM

Gold futures rose more than $5 an ounce on Monday on speculation that investors may stock up on the metal after the metal made its largest weekly price drop since mid-March, causing the dollar to drop.

Gold futures for August delivery gained $5.50, or 0.6 percent, to $897 an ounce on the Comex division of the New York Mercantile Exchange.

It fell to a low of $890 earlier in the session. The contract closed out last week with a loss of 4.2 percent. The metal reached a record $1,033.90 an ounce on March 17.

The two main drivers of the gold price, at the moment, remain oil and the U.S. dollar,' said Peter Spina, an analyst at GoldSeek.com, in a report to clients sent Monday.

Gold found some old friends in Asia over the weekend -- buying of the metal by jewelry fabricators became noticeable, finally, said Jon Nadler, a senior analyst at Kitco Bullion Dealers.

Meanwhile, while the economic calendar is not exactly lacking data flows for the first half of the week, the more significant and potentially dollar-moving figures will come Thursday and Friday.

Oil climbed after falling as much as 1.7 percent in New York. Gold futures rose 35 percent in the past year before today as oil doubled, reaching a record $135.09 a barrel on May 22.

On Monday, the dollar got a lift after U.S. manufacturing data were better than expected. The Institute of Supply Management's manufacturing index rose to 49.6 in May, up from 48.6 in April.

The dollar index, which tracks the greenback against a basket of six major currencies, was at 72.900, compared with 73.034 before the economic data.

Also on the Nymex, silver futures for July delivery rose 4.5 cents, or 0.3 percent, to $16.91 an ounce. The metal has climbed 13 percent this year, while gold gained 7 percent.

July platinum rose $1.80 to end at $2,015.60 an ounce while September palladium added $1.10 to finish at $440.10 an ounce on Nymex. July copper fell by 1.35 cents to close at $3.5965 a pound.